On Wednesday, the company told employees it plans to sell or close all of its stores in the U.S. and that it will file liquidation papers ahead of Thursday's hearing. CNBC reported Wednesday that the company was considering a proposal that could keep roughly 200 of its U.S. stores open, but the outcome of the plan remains up in the air.

Last September, the company filed for bankruptcy and it has clearance sales underway at about 170 of its stores that it plans to close next month, according to Business Insider.

Inside Look: The 2018 American International Toy Fair

Paul gets a sneak peek at the newest and coolest toys hitting the market this year.

(Published Wednesday, Feb. 28, 2018)

The company had hoped to make a comeback by increasing internet sales, but a dismal holiday season brought more bad news.

In the past, gift card holders have had little luck refunding unused gift card money during retail bankruptcies, according to Business Insider.

After customers filed a lawsuit against now-defunct Borders in 2011, a judge ruled that gift card holders would not be reimbursed for an estimated $210.5 million in gift cards, according to Business Insider.

Bankruptcy lawyer Corali Lopez-Castro told Business Insider it may be a matter of weeks before going-out-of-business sales start at Toys R Us stores.

Toys R Us declined comment to CNBC and Business Insider.

Sen. Chuck Schumer released a statement Wednesday, saying he's reached out to the FTC and is "urging the company to redeem outstanding gift cards for cash so they are not as worthless and unwanted as a lump of coal in a stocking."

"Toys R Us has been around forever. When I was four, that's where I went to buy toys," said Brian Laroche as he shopped with his five-year-old son in Secaucus. "Obviously he's sad that it's closing," Laroche said.